Comments on: Ideas for Solving the 20% House Downpayment Dilemma

By: VBB

VBB — Mon, 14 Sep 2009 13:22:51 +0000

My son and his wife earn about 130,000. Have car notes, credit card bills and school loans…they rent, but want to purchase a home. They have only 6000.00 to put down on a 150,000 home….and they want to take advantage of the 8000.00 new homeowner tax credit? Jobs are not secure…both are business consultants. We advise them to wait and save the down payment/closing costs/moving costs/incidental costs. what would you advise?

By: PYF Challenge

PYF Challenge — Wed, 25 Jun 2008 19:10:40 +0000

I know, first hand, how stressful it is to save for a home. Now is the time to buy, right? I am working with an online bank named FNBO Direct, (you can check out their website at http://www.fnbodirect.com) they are putting on a YouTube contest that is encouraging people to “Pay Yourself First” You should check out the web page (www.pyfchallenge.com).

Your readers could earn an extra $5,000 for their down payment, and a spa vacation. All they have to do is create a one-minute video telling FNBO Direct what they’re saving for, and why they should be selected as one of the five challengers… Upload the video to the group page (http://www.youtube.com/group/pyfchallenge) by July 31 to win. Heck FNBO Direct is giving a $10 gift card just for submitting a video and $500 to the top 20 videos. So just by submitting a video you at least get something!

By: mbhunter

mbhunter — Sat, 20 Oct 2007 15:44:38 +0000

Time is on people’s side if they’re waiting to buy. 20% will be a lot easier to make in a few years for the same house.

If you’re having trouble making the 20%, save, but realize that prices are still way out of whack in many places.

By: Tim

Tim — Thu, 18 Oct 2007 12:10:44 +0000

saladdin, depends on how you look at life i guess. if you really can’t sleep at night knowing someone gave you money to help buy a house, then oh well. to me, who really gives a flying whoop, even if you are 33 years old or 40 years old. I understand people want to do things on their own for whatever reasons, doesn’t make other people bad if they don’t. i have no qualms about it. it isn’t always about you, it’s sometimes about letting other people help you that want to do so. sometimes pride gets in the way. oh well, we’ll be living happily when our parents pay for our house.

By: Evan

Evan — Wed, 17 Oct 2007 20:12:25 +0000

I feel the need to clarify –

Everyone gets a $2mil Coupon for estate tax purposes (i.e. you can pass $2mil on to the next generation with no tax liability). Uncle Sam allows you to pass $1mil of that on during your lifetime, WITHOUT TAX LIABILITY (provided you file the appropriate form – Form 706).

As such, you could gift the entire amount of the house and still have no gift tax liability (which is currently at approximately 45%).

By: saladdin

saladdin — Wed, 17 Oct 2007 18:11:19 +0000

I care Tim. I understand that opinion also Tim. I was speaking for myself in saying that as a 33 year old guy I could not sleep at night knowing I had to rely on someone else’s money to get by. There is a difference in needing help to eat vs the need to buy that condo that just came on the market and have not saved a cent for. I have refused this kind of help before and will so in the future if it ever comes up again. You can call it stupid, ego or pride. But I know I would never feel as if the house was truly mine.

What if you sell the house? Do you give that 20% gift back or keep it?

saladdin

By: Tim

Tim — Wed, 17 Oct 2007 17:46:50 +0000

who really cares if you take a gift? so what if someone is willing to help you out? more power to you if you can get your parents/relatives/friends to pay the 20%. I’d love to be in that situation.

By: saladdin

saladdin — Wed, 17 Oct 2007 11:14:32 +0000

Please re-read the post.

If you have to get a gift from parents/grandparents/friends to afford 20% down then I consider that “depending on mommy.” As an adult taking gifts from parents should not be such a simple decision.

The only people I have a problem with is those that are not very bright and have trouble understanding simple posts. Of course this is not directed to anyone specifically.

saladdin

By: Robert

Robert — Wed, 17 Oct 2007 07:00:09 +0000

Patrick also forgot to mention that because a VA loan is guaranteed, you don’t need to pay that pesky PMI either in addition to not requiring a down payment. The interest rate will typically be slightly higher, of course.

By: FatLady

FatLady — Wed, 17 Oct 2007 03:40:52 +0000

Coinvesting in a financial instrument (which is what a piece of real estate is) and splitting the proceeds after a reasonable period of time is “depending on mommy”? How, exactly? If you coinvested in a business arrangement with a partner who was not related to you, would that be “depending on [fill in the blank]?”

Do we have a problem with women, or what?

By: CK

CK — Tue, 16 Oct 2007 12:53:45 +0000

You can also gift around the 12k gift limit by making a loan to someone and then forgiving 12k per year in the upcoming years.

By: Tim

Tim — Tue, 16 Oct 2007 12:06:15 +0000

the $12k gift is a per year limit, but someone can give more even within the one year based on the lifetime tax free limit. you’ll have to file a return on it, but remains tax free if you are under the $1million lifetime limit.

another option is not to buy a house. another option is to extend your time frame for buying a house rather than reducing your retirement investments.

By: saladdin

saladdin — Tue, 16 Oct 2007 11:54:02 +0000

To me the point of putting 20% down is having no PMI, financing less and getting a better loan rate then someone with a 80/20. All of those save you money over the long run and more importantly to me, I can sleep better at night. By doing a credit card transfer, ARM, 80/20 or borrowing from friends/family all you are doing is shifting the 20% around.

Someone above said rent is lost. Which is not accurate to me. If I can rent for less then what a mortgage would cost and invest the difference for the time being how is that losing?

I frequent many mortgage forums because I am saving for a house. From those I get that 80/20’s are getting harder to come by. They are no longer automatic.

When did it become so bad to save for what you want instead of wanting it now, now, now? Hell with the consequences. Some reasons the housing market is bottoming out is because people thought that rent was wasting money and decided to do 100% LTV loans instead of saving 20% down. Look how that worked out.

And personally, I would never accept a gift from parents, grandparents or friends. To me (I said to me) being an adult means taking care of yourself. Not depending on mommy.

saladdin

By: bryan

bryan — Mon, 15 Oct 2007 23:26:32 +0000

ive done the piggyback loan route. your second mortgage will have a much higher interest only rate (likely over 10%). simply pay this down faster and dont contribute any extra to the first loan.

other options are lines of credit, citibank credit card balance transfers at 0% where the money is sent directly to your checking account, visiting a mortgage broker who can accomodate 10% down payment (again this will be at a higher interest rate and not the best option).

you can also ask the seller to carry a 10 year note at 10% of the purchase price…

be creative. just because the lender needs 20% down, doesnt mean it has to be YOUR 20%. just borrow the money from any other source that is willing to lend it at reasonable rates….

By: James Woolley

James Woolley — Mon, 15 Oct 2007 20:47:38 +0000

It’s becoming a nightmare for first-time buyers here in the UK. With average house prices now around £200,000, FTB’ers are being asked to stump up £40,000 just to stand any chance of getting a mortgage, and with a possible credit crunch coming, they may even get refused a mortgage in the future as banks tighten their lending criteria.

Where I live in Somerset, average house prices are around £210,000, but average salaries are around £20,000 with many people earning less than this so it’s no surprise that a lot of people are still living at home into their 30’s or borrowing huge sums from their parents to get them on the property ladder.